Update on February Trades Expiring in 6 Days.

This week all the Bull Put and Bear Call spreads became a little safer and should all be expiring next Friday the 16th. The underlying SPX is now 37 points away from our Bear Call short strike of 1475. It would take a move of over 2% for it to breach our short strike. Certainly possible, but unlikely. Remember, since SPX is a European option so it settles at the opening price on Friday. This gives us only four trading days until option expiration.

Those subscribers who rolled the January NDX Bear Call trade to March (1900/1925) will be rewarded next week when this spread expires. The strategy worked perfectly and prevented realizing a loss on a spread trade in trouble. By closing and rolling this Bear Call spread we just extended the time frame for realizing a profit from the original trade filled in January. I am sure we will have to close and roll again sometime in 2007. To insure everyone is comfortable executing these rolling trades I will complement my Rolling Trade Alert with a Flash movie to illustrate the exact steps for processing each of the 2 required trades. This Flash movie with audio will be available on request and demonstrate the trades using TradeKing's and OptionXpress's trading systems.

Next weekend I will be emailing new credit spread trades expiring in March. We are doing very well with Bull Put trades so I will be focused on these first for each index. If I can execute a safe Iron Condor I will certainly do this. Last month we started entering our limit amounts using 1/2 of the bid/ask midpoints. All my trades were filled at these higher limits amounts as were the trades for the majority of subscribers who sent me emails. I will continue this process for all future trades. In the instance our trades are not filled I will email a new trade like I did this month. The RUT 710/700 Bull Put was emailed on 1/20/2007 but was never filled for the majority of subscribers. I emailed the new RUT 740/730 Bull Put trade on 1/30/2007 and this trade was filled.

This is tax time so I must share with all subscribers a message I received from a subscriber this weekend.

Brad, I tried to "mess around" with manually doing this but I discovered another way to handle this in Turbo Tax (just in case you ever get this question again from others). I used Form 6781. On that form only input the gains and losses for the year and the Turbo Tax program automatically takes the data and puts it on the correct lines according to the 60/40 rule automatically links it to line 4 and 11 of schedule D. So you were right and this is another great thing about trading options - save $$ on taxes. Dick